London Breakout 1

[R Carter]

Originally Posted by R Carter

I get confused with all the different time zones plus add +/- an hour for daylight saving.

I'll just say 09:00 GMT at whatever time of year it is... now!

Dan89

I believe thats what I stated as above 09:00 GMT.

I am certainly not attempting to pass this strategy off as my own... I credit Edward Revy at the bottom of the post.

Merely sharing it with the people on Babypips!

Having hung around on the ever popular 'Win Ratio' thread it seems to me that the principle problem is setting the defining high/ low of the night to early and thus causing its fair share of problems. Having discovered this strategy on another site I hoped it might go some way to solving this issue.

I also like the idea of using the trendines instead of the usual box found on so many 'Breakout' strategies.

[matlobien]

Originally Posted by R Carter

Matlobien

Congrats on making the grade! Incidently you types always make great traders. You have the mentality to sit it out in a muddy ditch sometimes for weeks as required for advanced reccky and then make the decisive move. Perfect mentality for FX trading.

I get confused with all the different time zones plus add +/- an hour for daylight saving.

I'll just say 09:00 GMT at whatever time of year it is... now!

No chart yet ?

I'm getting stiff waiting in this muddy ditch.

[cas]

Originally Posted by R Carter

As predicted its the 09:00 GMT candle that usually triggers a larger move followed by 2 more hour candles if its significant.

R Carter

And it bounced off 1.6000 major Resistance to the pip again...to use your phrase.

EDIT: GU that is.

That was the second time since yesterday.

[R Carter]

CAS

I didn't like the 1h chart this morning for a solid one directional move... too much movement Sunday night. So switched to 5m chart and took its lead at 09:00. Entered at around 1.5940 and exited at around 1.5990 on the retrace using 3/6 LWMA as a guide. Didn't go short... bugger!

[Dan89]

well according to Edward Revy who was the one who came up with this system on forex stratagies revealed, the 5 candles should be from 05:00 to 09:00 GMT. The 00:00 to 04:00 is for EST.

[fayizal]

except for today charts.. back test looks awesome.. hmmm...

[kadziu]

Originally Posted by R Carter

CAS

I didn't like the 1h chart this morning for a solid one directional move... too much movement Sunday night. So switched to 5m chart and took its lead at 09:00. Entered at around 1.5940 and exited at around 1.5990 on the retrace using 3/6 LWMA as a guide. Didn't go short... bugger!

Thanks Carter for the strategy, sounds very interesting indeed.
I was wondering why would you have taken the trade at 9:00, if we need 5 candles, wouldnt you wait for the 9:00 candle to close before you enter? Sorry I am confused


I am aware that for London Breakout there are as many strategies as there are traders. However this one looks quite promising. I have been testing many ways for trading LBO on the FX tester for a month now, amending, bending, refining and changing rules. I have gone through the GU charts atleast 15 times from Jan to Aug 2009 testing various methods to come out with the best results. I will try this one and record each trade and see what we get. It would be interesting to see some data with ratios and probabilities.

Will soon post the results.

Kind regards

[perfoma]

Originally Posted by R Carter

London Breakout 1

This London Breakout strategy has a win ratio of over 90%.

Currency pair: GBP/USD, EUR/USD - tested. Other pairs may also be used.

Time frame: 1 hour

Indicators: none

At this point it might be an idea to bring up the chart at the bottom of this post and read the strategy whilst looking at the chart.

Trading setup:

For this Forex system to work properly a trader needs to know the basics of drawing trend lines and be able to identify support and resistance lines.

Our working range includes 5 candles: from midnight to 04:00 EST (including the 04:00 candle).
Optional: draw a midnight vertical line for visual aid.

With those 5 candles look for valid swing high and swing low of the price.
Draw a downtrend trend line connecting a found swing high to the most recent swing high of the previous days (make sure the last one is a valid high to draw a downtrend trend line through it).
Do the same for a swing low: connect it to the most recent swing low of the previous days, make sure you are putting in the right trend line using the rules of drawing uptrend trend lines.

If a trader sees, for example, no swings high in the 5 candle range, that means there will be no downtrend trend lines this morning.

The Entry is on the break of either one of the two trend lines and is immediate without waiting for a current candle to close. A protective stop is placed just above/ below the candle that broke the trend line.

Profit target:

Usually the whole trade will unfold within the next three candles (count in the candle that broke the trend line).
So, after the actual breakout we have 3 hours or 3 candles to trade, after that we will exit the trade with whatever profits are made.

Main rule- Using S/R + timing:

Profit target is going to be the nearest level of support or resistance according to the S/R lines.
If, however, after only one candle this target is reached, it suggests a very strong market, we would therefore stay in the trade and set our goal for the next support/ resistance level. We would also choose the second S/R level as our profit goal if the first S/R level appears to be close to our entry point.
We have three candles to trade after the breakout, thats why we can trade calmly and allow our goal to shift to the next S/R level.

It is at the traders absolute discretion whether to set the target at the nearest S/R level and exit the trade once the target is hit or use 2 or 3 consecutive candles.

Another simplified option would be with fixed targets and timing.

For example, EUR/USD target = 20 pips - spread. GBP/USD = 40 pips - spread. These are only suggestions. For other currency pairs you will need to back or forward test.

Thats it! Properly applied this London breakout strategy is more than 90% effective.

Good luck and good trading - Robert.


Thanks to: Edward Revy

Thanks. Perfect Idea

[fayizal]

Market was a little trendy today.. Stuck on to the trade and got 20 pips...



GBP/USD was better....

[Geoft85]

Folks, could someone post today's charts so I know i've understood the strategy correctly ?

Also can I confirm we are taking the candles from 3am GMT to 7:59 GMT, in other words, 4am to 8:59 london local time (BST).